Tillmanns v. Tillmanns: Imputation of Income

Tillmanns v. Tillmanns, 2014 ONSC 6773 deals with the concept of imputing income.

If a party to a matrimonial dispute earns less money than what s/he is capable of earning, a court has the discretion to impute income to that spouse.

Section 19(1) of the Child Support Guidelines permits the court to impute income as follows:

The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include:

• The parent or spouse is intentionally underemployed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
• The parent or spouse is exempt from paying federal or provincial income tax;
• The parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
• It appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
• The parent's or spouse's property is not reasonably utilized to generate income;
• The parent or spouse has failed to provide income information when under a legal obligation to do so;
• The parent or spouse unreasonably deducts expenses from income;
• The parent or spouse derives a significant portion of income from dividends, capital gains, or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and,
• The parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

In Tillmanns, Justice Pazaratz explains the common theme that courts review in cases dealing with the imputation and attribution of income:

"All of these principles have a common theme: reasonableness. Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of the children. Stewart (supra)"

In light of the above, in Tillmanns the Court ruled that the father’s decision to go back to school once he has lost his job/career was reasonable. The decision to take a break from earning a livelihood by going back to school and creating a better future for himself and his children should not be punished by attributing more income to his current financial statement.

To learn more about imputing income, call 905.707.3370 today.